Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 08, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Modsys International Ltd | ||
Entity Central Index Key | 1,029,581 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 3,092,180 | ||
Entity Common Stock, Shares Outstanding | 19,086,159 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 410 | $ 1,479 |
Restricted cash | 254 | 4 |
Trade accounts receivable, net (Note 12A1) | 2,306 | 2,020 |
Other current assets (Note 12A2) | 237 | 120 |
Total current assets | 3,207 | 3,623 |
LONG-TERM ASSETS: | ||
Property and equipment, net (Note 4) | 33 | 246 |
Goodwill (Note 5) | 14,157 | 25,803 |
Intangible assets, net (Note 6) | 2,361 | 3,175 |
Total long term assets | 16,551 | 29,224 |
Total assets | 19,758 | 32,847 |
CURRENT LIABILITIES: | ||
Short-term bank credit and others (Note 8B) | 785 | 2,736 |
Accounts payable and accruals: | ||
Trade accounts payable | 1,155 | 1,004 |
Deferred revenue | 324 | 925 |
Other current liabilities (Note 12A3) | 915 | 959 |
Total current liabilities | 3,179 | 5,624 |
LONG-TERM LIABILITIES: | ||
Accrued severance pay, net (Note 7A) | 238 | 232 |
Loans from banks and others (Note 8B) | 2,022 | 288 |
Other non-current liabilities | 18 | 30 |
Total long-term liabilities | 2,278 | 550 |
Total liabilities | 5,457 | 6,174 |
COMMITMENTS AND CONTINGENCIES (Note 9) | ||
Equity (Note 10): | ||
Share capital - Preferred shares of .04 NIS par value (authorized: December 31, 2016 and December 31, 2015 - 1,000,000 shares; shares issued: December 31, 2016 - 540,000 shares and December 31, 2015 - 500,000 shares) | 1,247 | 1,164 |
Share capital - ordinary shares of NIS 0.04 par value (authorized: December 31, 2016 and 2015 - 25,000,000 shares; shares issued: December 31, 2016 - 19,086,159 and December 31, 2015 - 18,602,041) | 173 | 172 |
Additional paid-in capital | 155,468 | 154,882 |
Accumulated other comprehensive loss | (1,537) | (1,537) |
Accumulated deficit | (138,028) | (125,765) |
Treasury shares - December 31, 2016 and 2015 - 33,239 shares | (1,821) | (1,821) |
ModSys International Ltd. Shareholders' Equity | 15,502 | 27,095 |
Noncontrolling interest | (1,201) | (422) |
Total equity | 14,301 | 26,673 |
Total liabilities and equity | $ 19,758 | $ 32,847 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - ₪ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred shares, par value per share | ₪ 0.04 | ₪ 0.04 |
Preferred shares, shares authorized | 1,000,000 | 1,000,000 |
Preferred shares, shares issued | 540,000 | 500,000 |
Ordinary shares, par value per share | ₪ 0.04 | ₪ 0.04 |
Ordinary shares, shares authorized | 25,000,000 | 25,000,000 |
Ordinary shares, shares issued | 19,086,159 | 18,602,041 |
Treasury shares, shares | 33,239 | 33,239 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue: | ||
Services | $ 9,212 | $ 8,516 |
Products | 1,769 | 1,291 |
Total revenue | 10,981 | 9,807 |
Cost of revenue | 4,857 | 6,033 |
Gross profit | 6,124 | 3,774 |
Research and development costs | 2,053 | 1,495 |
Selling, general, and administrative expenses | 4,263 | 4,851 |
Amortization of intangible assets | 632 | 946 |
Impairment of intangible assets | 182 | 1,466 |
Impairment of goodwill | 11,646 | |
Total operating expenses | 18,776 | 8,758 |
Operating loss | (12,652) | (4,984) |
Financial expenses, net | 312 | 1,117 |
Loss before taxes on income | (12,964) | (6,101) |
Taxes on income | 22 | 41 |
Net loss | (12,986) | (6,142) |
Less: Net loss attributable to non-controlling interest | (806) | (328) |
Net loss attributable to ModSys International Ltd. shareholders | $ (12,180) | $ (5,814) |
Loss per share - basic and diluted: | ||
Attributable to the shareholders | $ (0.66) | $ (0.32) |
Weighted average shares outstanding, basic and diluted | 18,658 | 17,907 |
Statements of Comprehensive Inc
Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (12,986) | $ (6,142) |
Other comprehensive income | ||
Total comprehensive loss | (12,986) | (6,142) |
Comprehensive loss attributable to the non-controlling Interests | (806) | (328) |
Comprehensive loss attributable to ModSys International Ltd. shareholders | $ (12,180) | $ (5,814) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Share capital Number of ordinary shares | Preferred shares | Additional paid-in capital | Accumulated other comprehensive loss | Cost of Company Shares held by subsidiaries | Retained earnings (Accumulated deficit) | Non controlling interest | ||
Balance at Dec. 31, 2014 | $ 30,406 | $ 170 | $ 153,208 | $ (1,537) | $ (1,821) | $ (119,619) | $ 5 | |||
Balance, shares at Dec. 31, 2014 | 17,844,094 | |||||||||
Net loss | (6,142) | (5,814) | (328) | |||||||
Intercompany Merger | 103 | (103) | ||||||||
Stock-based compensation ("SBC") | 426 | 422 | 4 | |||||||
Issuance of warrants | 1,151 | 1,151 | ||||||||
Issuance of preferred shares, net | 832 | 832 | ||||||||
Beneficial conversion feature | 332 | (332) | ||||||||
Issuance of ordinary shares | $ 2 | (2) | ||||||||
Issuance of ordinary shares, shares | 625,000 | |||||||||
Issued RSUs for SBC | [1] | |||||||||
Issued RSUs for SBC, shares | 99,708 | |||||||||
Balance at Dec. 31, 2015 | 26,673 | $ 172 | $ 1,164 | 154,882 | (1,537) | (1,821) | (125,765) | (422) | ||
Balance, shares at Dec. 31, 2015 | 18,568,802 | |||||||||
Net loss | (12,986) | (12,180) | (806) | |||||||
Stock-based compensation ("SBC") | 364 | 337 | 27 | |||||||
Dividend in kind | 83 | (83) | ||||||||
Issuance of ordinary shares | $ 1 | 249 | ||||||||
Issuance of ordinary shares, shares | 250 | 378,788 | ||||||||
Issued RSUs for SBC | [1] | [1] | ||||||||
Issued RSUs for SBC, shares | 138,569 | |||||||||
Balance at Dec. 31, 2016 | $ 14,301 | $ 173 | $ 1,247 | $ 155,468 | $ (1,537) | $ (1,821) | $ (138,028) | $ (1,201) | ||
Balance, shares at Dec. 31, 2016 | 19,086,159 | |||||||||
[1] | Less than $1 thousand. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (12,986) | $ (6,142) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 866 | 1,032 |
Intangible assets and goodwill impairment | 11,828 | 1,466 |
Increase in accrued severance pay, net | 6 | 3 |
Stock-based compensation | 364 | 426 |
Grant of warrants to shareholders | 983 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in trade receivables | (286) | 459 |
Decrease (increase) in other current assets | (117) | 56 |
Increase (decrease) in trade payables | 151 | (226) |
Increase (decrease) in other liabilities and deferred revenue | (657) | 559 |
Net cash used in operating activities | (831) | (1,384) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Change in restricted cash | (250) | 4 |
Purchase of property and equipment | (21) | (11) |
Net cash used in investing activities | (271) | (7) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Short term bank credit | 100 | 1,467 |
Issuance of ordinary shares | 250 | |
Issuance of preferred shares and warrants | 1,000 | |
Repayment of long term loan | (317) | (46) |
Net cash provided by financing activities | 33 | 2,421 |
NET CASH INCREASE (DECREASE) IN CASH AND CASH EQUVIALETS | (1,069) | 1,030 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,479 | 449 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 410 | 1,479 |
Cash paid during the year for: | ||
Interest | $ 114 | $ 129 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting Policies: A. General: The significant accounting policies, applied on a consistent basis, are as follows: 1. The Company: ModSys International Ltd. (together with its subsidiaries, the “Company” or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology modernization solutions. Modern Systems develops and markets enterprise legacy migration solutions and provides tools and professional services to international markets through several entities including wholly-owned or majority-owned subsidiaries located in: the United States, the United Kingdom, Italy, Romania and Israel. These technologies and services allow business to migrate from their legacy mainframe and distributed information technology infrastructures to modern environments and programming languages. The Company has incurred negative cash from operation and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flow position. Management believes that current cash position is sufficient to support the ongoing operations for the next twelve months from the date of this Annual Report. (See also Note 8A). 2. Accounting Principles: The consolidated financial statements are prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America. 3. Functional Currency: The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“dollar”). In addition, a substantial portion of the Company’s revenue and costs are incurred in dollars. Thus, the functional and reporting currency of the Company is considered to be the dollar. The functional currency of all subsidiaries is the US dollar therefore there is no unrealized gain/loss. Non-monetary transactions denominated in currencies other than the dollar are measured and recorded in dollar at the exchange rates prevailing at transaction date. Monetary assets and liabilities denominated in currencies other than the dollar are translated at the exchange rate on the balance sheet date. Transaction gain or losses on foreign currency translation are recorded in consolidated statement of operations. 4. Use of Estimates and Assumptions in the Preparation of the Financial Statements: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. B. Principles of Consolidation: The consolidated financial statements include the accounts of ModSys International Ltd. and its subsidiaries in which it has a controlling interest. Acquisition of subsidiaries is accounted for under the acquisition method. All intercompany balances and transactions have been eliminated upon consolidation. Non-controlling interests are included in equity. C. Cash and Cash Equivalents: Cash equivalents are considered by the Company to be highly-liquid investments, including inter-alia, short-term deposits with banks, which do not exceed maturities of three months at the time of deposit and which are not restricted. D. Allowance for Doubtful Accounts: The Company establishes an allowance for doubtful accounts to ensure trade and financing receivables are not overstated due to uncollectability. The allowance for doubtful accounts was based on specific receivables, which their collection, in the opinion of Company’s management, is in doubt. Trade receivables are charged off in the period in which they are deemed to be uncollectible. E . Property and Equipment, Net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over their estimated useful lives. Annual rates of depreciation are as follows: % Computers and peripheral equipment 20-33 (mainly 33) Office furniture and equipment 6-15 (mainly 7) Leasehold improvements Over the shorter of lease term or the life of the assets Motor vehicles 15 F. Impairment of Long-Lived Assets: The Company evaluates long-lived assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flow and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, it reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. For the year ending December 31, 2016, no impairment losses had been identified. G. Goodwill and purchased intangible assets Goodwill and purchased intangible assets have been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but rather is subject to an annual impairment test. The Company is one operating segment and one reporting unit related to its overall information technology modernization. The goodwill impairment tests are conducted in two steps. In the first step, the Company determines the fair value of the reporting unit. If the net book value of the reporting unit exceeds its fair value, the Company would then perform the second step of the impairment test which requires allocation of the reporting unit’s fair value of all of its assets and liabilities in a manner similar to an acquisition cost allocation, with any residual fair value being allocated to goodwill. The implied fair value of the goodwill is then compared to the carrying value to determine impairment, if any. Generally, the company determines the fair value of the reporting unit using the market approach which is based on the market capitalization by using the share price of the Company in the NASDAQ stock market and an appropriate control premium. As of December 31, 2015, the market capitalization of the Company was significantly higher than the net book value of the reporting unit and therefore there was no need to calculate a control premium or to continue to step 2. As of December 31, 2016, after a 3-month period where the Company’s market capitalization was significantly lower than the net book value of the reporting unit the Company performed an analysis of an appropriate control premium which was found as immaterial. In establishing the appropriate market capitalization, the Company looked at the 10 days preceding the date that the annual impairment test is performed (the comparison period). There was a high volatility in the price and volumes of the Company’s share during the comparison period (between $0.63-$1.17). Around 40% of the trading volume in those 10 days was executed at a price per share within the range of $0.65-$0.69. During the comparison period and after the date that the annual impairment test was performed the Company engaged in a share purchase agreement at a price per share of $0.66 (see Note 10). In order to calculate its market capitalization, the Company used the price per share of $0.66. Since there was a high volatility in the Company’s price per share we corroborated the fair value by performing a discounted cash flows evaluation which resulted in an amount not materially different from the market capitalization. Following the results of the step one test, the Company continued to the second step which was performed by allocating the reporting unit’s fair value to all of its assets and liabilities, with any residual fair value being allocated to goodwill. The Company determined that the carrying value of goodwill should be impaired and therefore an impairment of $11.6 million was recorded. Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives of between 10 months to 9 years (for impairment of intangible assets see also Note 1F) On completion of the Company’s merger on December 1, 2014 with Sophisticated Business Systems, Inc., a Texas corporation doing business as “Ateras,” the fair value purchase price allocation from this acquisition resulted in the Company recording approximately $5.2 million in technology intangible assets. The Company subjected the value of these intangible assets to an annual impairment test as of December 31, 2016. In 2016, the impairment test indicated that the fair value of these intangible assets at this time was approximately $2.3 million, net of amortization, causing the Company to record an impairment of approximately $182 thousand. In 2015, the impairment was approximately $1.5 million. H. Research and Development Costs: Research and development costs are charged to the statement of income as incurred. ASC No. 985, “Software”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on the Company’s product development process, technological feasibility is established when detailed program design is completed and verified. Costs incurred by the Company between completion of detailed program design and the point at which the products are ready for general release, have been insignificant. Therefore, all research and development costs have been expensed. I. Stock-based Compensation: In the past two years, all of the stock-based compensation awards were of restricted stock units (“RSUs”). RSUs are valued based on the market value of the underlying stock at the date of grant since the restriction is imposed during the vesting period. The Company also has a stock option plan. Stock option awards are measured and recognized as compensation expense based on estimated fair values on the date of grant using the Black-Scholes option-pricing model. This option pricing model requires that the Company makes several estimates, including the option’s expected life and the price volatility of the underlying stock. The Company recognizes the estimated fair value of option-based awards and RSUs, net of estimated forfeitures, as stock-based compensation costs using the accelerated vesting method. For the years ended December 31, 2016 and 2015 the Company recorded stock-based and RSUs compensation costs in the amount of $364 and $426 thousand, respectively. On December 31, 2016, the total unrecognized stock-based and RSUs compensation costs amounted to $396 thousand, and are expected to be recognized over the next 3 years. J. Revenue Recognition: Revenue derived from direct software license agreements are recognized in accordance with FASB ASC Topic 985 “Software” (“ASC 9 85”), upon delivery of the software, when collection is probable, the license fee is otherwise fixed or determinable and persuasive evidence of an arrangement exists. The Company recognizes revenue from consulting fees based on the number of hours performed. Revenue from maintenance services are rec When a project involves significant production, modification, customization of software, or delivery of service, that are essential to the fundamentals of the software, revenue is recognized according to the percentage of completion method in accordance with the provisions of FASB ASC Topic 605-35. Under this method, estimated revenue is generally recognized based on costs incurred to date, as a percentage of total updated estimated costs. The Company recognizes contract losses, if any, in the period in which they first become evident. There are no rights of return, price protection or similar contingencies in the Company’s contracts. On December 31, 2016, approximately $1.5 million of the accounts receivable balance was unbilled due to the customer’s payment terms. On December 31, 2015, the amount of unbilled revenue was $1.1 million. The Company presents revenue from products and revenue from services in separate line items. The product revenue line item includes revenue generated from stand-alone software products. In the services revenue line item, the Company includes revenue generated from maintenance and consulting fees and revenue accounted for pursuant to ASC 605-20. Tax collected from customers and remitted to government authorities (including VAT) are presented in the income statement on a net basis. K. Advertising Costs: The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2016 and 2015 were $78 and $151 thousand, respectively. L. Income Taxes: Deferred taxes are determined utilizing the “asset and liability” method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it’s more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the expected reversal dates of the specific temporary differences. The Company applied ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. M. Loss Per Share: Basic net loss per share is computed based on the weighted average number of ordinary shares outstanding during each year (including fully vested RSUs), net of treasury shares. Diluted earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year (see also Note 12C). Since the Company incurred net loss during the periods presented, no diluted EPS was presented as all the potential ordinary shares were anti-dilutive. N. Concentration of credit risks: Financial instruments that have the potential to expose the Company to credit risks are mainly cash and cash equivalents, bank deposit accounts, and trade receivables. The Company holds cash and cash equivalents, and deposit accounts at large banks in Israel, the United States, and Europe, thereby substantially reducing the risk of loss. The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts and generally does not require collateral. An appropriate allowance for doubtful accounts is included in the accounts. O. Fair value measurement: The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1 Level 2 Level 3 In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. P. Comprehensive loss: Comprehensive loss includes only net income. Q. Treasury Shares: In the past, the Company repurchased its ordinary shares from time to time on the open market and they are currently held as treasury stock. The Company presents the cost to repurchase treasury stock as a reduction of shareholders’ equity. When treasury shares are used as consideration for share based payment the reduction is based on average purchase cost. R. Recently Issued Accounting Pronouncements 1. Adopted in current period: In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial statements – Going concern (subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-14”). The new standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual periods thereafter. The new standard had no effect on the Company’s consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2016. The new standard had no effect on the Company’s consolidated financial statements. 2. Not yet adopted in current period: In May 2014, the FASB issued ASU No. 2014-09, Revenue from contracts with customers (Topic 606). Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on accounting for licenses of intellectual property, identifying performance obligations, principal versus agent considerations and other narrow technical corrections. The new revenue standard (and its related amendments) are effective for reporting periods (interim and annual) beginning after December 15, 2017, with early adoption permitted for reporting periods (interim and annual) beginning after December 15, 2016. The standard permits two methods of adoption: retrospectively to each reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company expects to adopt the standard in the first quarter of 2018 under the modified retrospective transition method. Based on the analysis conducted to date, the Company does not believe the adoption of the standard will have a material impact on its consolidated financial statements. However, the Company does have a few contracts that are comprised of a license agreement and related maintenance support, which are currently immaterial. Other similar contracts might be material in future periods, therefore, the Company is still assessing the potential impact of these contracts. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, which supersedes the lease accounting guidance in ASC 840, Leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2018 with early adoption permitted. The amendments must be adopted using a modified retrospective approach. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13. This update replaces the incurred loss impairment methodology in current U.S. GAAP for recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, the guidance requires to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2019. Early adoption is permitted as of reporting periods beginning after December 15, 2018, including in interim periods. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the amendments are effective. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-15. This update addresses whether to present certain specific cash flow items as operating, investing or financing activities. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017. Early adoption is permitted. The amendments will be applied retrospectively to each period presented. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In October 2016, the FASB issued Accounting Standards Update (ASU) 2016-16. This update removes the current exception in US GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017, with early adoption permitted. The amendments will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18. This updates provides guidance on the classification and presentation of changes in restricted cash or restricted cash equivalents in the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017 with early adoption permitted. The amendments will be applied retrospectively to each period presented. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Business Combinations | Note 2 – Business Combinations: Ateras Merger On December 1, 2014, the Company completed a merger with Sophisticated Business Systems, Inc., a Texas corporation doing business as “Ateras.” At the closing, BP-AT Acquisition LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Modern Systems Corporation (f/k/a BluePhoenix Solutions USA, Inc.), a Delaware corporation and an indirect, wholly-owned subsidiary of ModSys International Ltd. merged with and into Ateras (the “Ateras Merger”). As a result of the Ateras Merger, the separate corporate existence of BP-AT Acquisition LLC ceased and Ateras continued as the surviving corporation and a wholly-owned subsidiary of Modern Systems Corporation. The new entity was then renamed MS Modernization Services, Inc. As of April 2015, due to the Zulu intercompany merger, MS Modernization Services is now a majority-owned subsidiary of Modern Systems and directly and indirectly owned at 88.7% by ModSys International Ltd. (See below discussion of Zulu Intercompany Merger). Upon the closing of the Ateras Merger, the Company issued 6,195,494 unregistered ordinary shares, par value NIS 0.04 per share, to the former Ateras shareholders in exchange for the cancellation of the shares of Ateras stock held by such shareholders in connection with the Ateras Merger. Zulu Intercompany Merger On April 23, 2015, the Company completed the intercompany merger (the “Zulu Intercompany Merger”) of their majority-owned subsidiary (71.8% ownership), Zulu Software, Inc. with and into the Company’s wholly-owned subsidiary, MS Modernization Services, Inc. as part of an internal organizational restructuring. The name of the surviving subsidiary is MS Modernization Services, Inc. As a result of the intercompany merger, ModSys International Ltd. owns 88.7% of the surviving subsidiary, MS Modernization Services, Inc. The transaction was accounted for as an equity transaction with non-controlling interests. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement | Note 3 - Fair Value Measurement: Items carried at fair value as of December 31, 2016 and 2015 are classified in the table below in one of the three categories described in Note 1 N2. Fair value measurements using input type December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 410 - - $ 410 Restricted cash 254 - - 254 Intangible Assets - - 2,361 2,361 $ 664 $ - $ 2,361 $ 3,025 Nonrecurring Fair Value Measurements The Company’s goodwill is measured at fair value on a nonrecurring basis when impairment indicators are present. The categorization of the framework used to estimate the fair value is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. The goodwill is adjusted to fair value only when the carrying values exceed its fair value. Based on the results of the Company’s annual impairment tests completed during the year ended December 31, 2016, the Company determined that goodwill was impaired. As a result, the Company recognized impairment charges of $11.6 million during the year ended December 31, 2016. Fair value measurements using input type December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,479 - - $ 1,479 Restricted cash 4 - - 4 Intangible Assets 3,175 3,175 $ 1,483 $ - $ 3,175 $ 4,658 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, Net | Note 4 - Property and Equipment, Net: Composition of property and equipment, grouped by major classifications: December 31, 2016 2015 (in thousands) Cost: Computers and peripheral equipment $ 4,590 $ 8,726 Office furniture and equipment 411 537 Leasehold improvements 432 268 Motor vehicles 17 25 5,450 9,556 Accumulated Depreciation: Computers and peripheral equipment 4,562 8,576 Office furniture and equipment 406 441 Leasehold improvements 432 268 Motor vehicles 17 25 5,417 9,310 $ 33 $ 246 Depreciation expenses totaled $234 and $86 thousand for the years ended December 31, 2016 and 2015, respectively. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill [Abstract] | |
Goodwill | Note 5 - Goodwill: The change in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 is as follows: December 31, 2016 2015 (in thousands) Balance as of January 1 Goodwill $ 67,618 $ 67,618 Accumulated impairment losses at the beginning of the period (41,815 ) (41,815 ) 25,803 25,803 Changes during the year Goodwill impairment* (11,646 ) - Balance as of December 31 Goodwill 67,618 67,618 Accumulated impairment losses at the end of the period (53,461 ) (41,815 ) $ 14,157 $ 25,803 *see also note 1G |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets, Net [Abstract] | |
Intangible Assets, Net | Note 6 - Intangible Assets, Net: Composition: Useful life December 31, (years) 2016 2015 (in thousands) Original amount: Technology* 5 $ 51,494 $ 51,494 Customer related and backlog* 0.8 to 9 5,313 5,313 Others 14 14 56,821 56,821 Accumulated Depreciation: Technology** 49,147 48,333 Customer related and backlog 5,313 5,313 54,460 53,646 $ 2,361 $ 3,175 * The amounts of technology and backlog from the Ateras Merger are $5.2 million and $345 thousand, respectively. ** Includes impairment to amortization expense of $182 thousand for 2016 and $1.5 million for 2015. (See also Note 1G). |
Accrued Severance Pay, Net
Accrued Severance Pay, Net | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Severance Pay, Net [Abstract] | |
Accrued Severance Pay, Net | Note 7 - Accrued Severance Pay, Net: A. Accrued Liability: The Company may be liable for severance pay to its employees pursuant to the applicable local laws prevailing in the respective countries of employment and employment agreements. For Israeli employees, the liability is partially covered by individual managers’ insurance policies under the name of the employee, for which the Company makes monthly payments. The Company may make withdrawals from the managers’ insurance policies only for the purpose of paying severance pay. U.S. employees are eligible to participate in a 401(k) retirement plan. Under the plan, employees may elect to defer a portion of their salary from taxes and invest it for retirement. The Company may, on a discretionary basis, make matching contributions to the employee deferrals. There was a discretionary contribution of $0 and $51 thousand in 2016 and 2015, respectively. The amounts accrued and the amounts funded with managers’ insurance policies are as follows: December 31, 2016 2015 (in thousands) Accrued severance pay $ 593 $ 555 Amount funded (355 ) (323 ) $ 238 $ 232 B. Expenses: The expenses related to severance pay for the years ended December 31, 2016 and 2015, were $91 and $85 thousand, respectively. |
Loans from Banks and Others
Loans from Banks and Others | 12 Months Ended |
Dec. 31, 2016 | |
Loans from Banks and Others [Abstract] | |
Loans from Banks and Others | Note 8 - Loans from Banks and Others A. Credit Facility In September 2014, the Company entered into an amendment to the Company’s existing loan agreement with Comerica Bank to: (i) increase the non-formula revolving line up to the amount of $2 million backed by guarantees; (ii) increase the borrowing base revolving line amount up to $1.5 million upon the closing of the Ateras merger; and (iii) extend the loan maturity date to December 31, 2015. The amendment has a financial covenant for a minimum liquidity ratio. The Company’s obligations under the amendment are secured by a security interest in the Company’s copyrights, trademarks, and patents. The remaining substantive provisions of the credit facility were not materially changed by this amendment. In May 2015, the Company entered into an additional amendment to the Company’s existing loan agreement with Comerica Bank to: (i) extend the maturity date of the non-formula revolving line and the revolving line to June 30, 2016; (ii) require us to raise new equity, on terms and from investors satisfactory to the lender, of not less than $2.5 million on or before December 31, 2015; and (iii) increase the number of trade accounts for which the concentration limit is not applicable. The remaining substantive provisions of the credit facility were not materially changed by this amendment. On March 16, 2016 , the Company entered into the Fifth Amendment to the existing loan agreement with Comerica Bank to: (i) waive the liquidity covenant violations of September and December 2015; (ii) extend the maturity date of the non-formula revolving line and the revolving line to June 30, 2017; (iii) amend the definition of eligible accounts receivable; (iv) waive the equity event of $2.5 million on or before December 31, 2015; (v) add a new six month rolling EBITDA covenant and (vi) limit the amount of cash transfer to the parent company. The remaining substantive provisions of the credit facility were not materially changed. On August 4, 2016, the Company entered into the Sixth Amendment to the existing loan agreement with Comerica Bank to: (i) extend the maturity date of the non-formula revolving line and the revolving line to July 1, 2018; (ii) amend the EBITDA covenant requirements; and (iii) change the definition of liquidity to include a requirement to have a minimum balance of cash in Comerica Bank of $250 thousand at the end of each month. The remaining substantive provisions of the credit facility were not materially changed by this amendment. On February 15, 2017, the Company entered into the Seventh Amendment to the existing loan agreement with to: (i) increase the amount of credit available on the non-formula line to $3.0 million; (ii) extend the maturity date of the non-formula revolving line and revolving line to February 15, 2019; (iii) amend the EBITDA covenant requirements; (iv) decrease the revolving line amount of credit available to $1.0 million from $1.5 million; and (iv) amend the definition of a new equity event. The remaining substantive provisions of the credit facility were not materially changed by this amendment. As of December 31, 2016, we had borrowed $2.0 million against our non-formula revolving line and $533 thousand against the revolving line. The principal terms of the agreement are as follows: ● non-formula revolving line in the amount up to $2.0 million backed by a guarantee from two of the major shareholders; ● revolving line (accounts receivable based) loan in the amount up to $1.5 million; ● both the non-formula revolving line and revolving line loan are at market based interest rates based on Prime + a margin; and ● financial covenant for a minimum bank debt liquidity coverage ratio, calculated as a ratio of liquidity to all indebtedness , other than indebtedness that is guaranteed, to the bank. There is a financial covenant for a minimum liquidity ratio. There are some restrictions on cash balances to be held within banks other than Comerica. As of December 31, 2016, the Company was in compliance with these restrictions. B. Composition: Average interest rate December 31, as of 2016 2015 December 31, 2016 Linkage Total long-term liabilities net of current portion % (in thousands) Loan from bank 4.25 $ $ 2,523 $ 2,702 Related party promissory note 2.00 $ $ 220 $ 220 Ministry of Production in Italy (Note 9 A3) 0.87 € 64 102 Current portion (785 ) (2,736 ) Long term portion $ 2,022 $ 288 C. Long-term Loans from banks and others are due as follows: December 31, 2016 2015 (in thousands) First year (current portion) $ 785 $ 2,736 Second year 32 254 Third year 1,990 34 Fourth year and thereafter - - Total $ 2,807 $ 3,024 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 9 - Commitments and Contingencies: A. Commitments 1. Lease. Office Facilities Vehicles, Equipment, and Other (in thousands) Fiscal 2017 $ 231 $ 32 Fiscal 2018 189 32 Fiscal 2019 74 - Fiscal 2020 36 - Fiscal 2021 26 - $ 556 $ 64 2. Israel’s Office of the Chief Scientist. 3. Ministry of Production in Italy B. Contingencies The Company evaluates estimated losses for indemnifications due to product infringement under FASB Topic ASC 450 “Contingencies”. At this time, it is not possible to determine the maximum potential amount under these indemnification clauses due to lack of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, the Company has not incurred costs as a result of obligations under these agreements and has not accrued any liabilities related to such indemnification obligations in the Company’s financial statements. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Equity | Note 10 - Equity: A. Share Capital: The Company’s shares began trading in the United States on the NASDAQ Global Market on January 31, 1997 under the symbol “BPHX.”. In December 2014, in connection with a change of our corporate name, we changed our symbol to “MDSY.” In January 2016, the Company moved to the NASDAQ Capital Market under the symbol “MDSY.” On November 25, 2015, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Columbia Pacific Opportunity Fund, LP, Prescott Group Aggressive Small Cap Master Fund and Mindus Holdings, Ltd. (the “Investors”), providing for the issuance in a private placement to the Investors thereunder an aggregate amount of (1) 500,000 preferred shares and (2) warrants to purchase an aggregate of 250,000 ordinary shares of the Company. These warrants have an exercise price of $0.01 per share, and may be exercised in whole or part at any time for two years after issuance. The preferred shares carry an 8% per annum cumulative dividend payable in kind by additional preferred shares, calculated based on amount of $2.00 per share, subject to adjustment for stock splits, combinations, recapitalizations and the like. The preferred shares are convertible into the Company’s ordinary shares on a one-to-one basis at the option of the holder. Should the volume weighted average price of the ordinary shares be $5.00 or more for ten consecutive trading days at any time two years from the date of issuance, the preferred shares will be automatically converted into ordinary shares at the adjusted $2.00 share price. Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the preferred shares are entitled to a preferential payout of $3.00 per share. The fair value of the preferred shares was determined to be $2,688,375 as of December 31, 2015, and the fair value of the warrants was determined to be $540,528 as of December 31, 2015. The purchase price of $1.0 was prorated between the preferred shares and warrants based on their respective fair values. The Company followed the guidance in ASC 480-10-25 and followed the whole instrument analysis approach when analyzing if the preferred shares are more akin to debt or to equity and concluded that the preferred shares are more akin to equity. The Company followed the guidance in ASC 815 and concluded that the conversion feature should not be separated and accounted for the transaction as an embedded derivative. A beneficial conversion feature (“BCF”) arises since the conversion price of the convertible preferred shares is less than the fair value of ordinary share (the preferred shares are convertible into the Company’s ordinary shares on a one-to-one basis). The BCF is calculated based on the intrinsic value as the difference between the effective conversion price (between the preferred shares and ordinary shares) and the market value on the date the preferred shares were issued, multiplied by the number of shares into which the preferred shares are convertible. The BCF from the issuance of the convertible preferred shares resulted in $332 thousand being recorded in the Company’s shareholders’ equity as a reduction of the retained earnings and an increase to preferred shares. The Purchase Agreement was approved by our shareholders on December 29, 2015. The investors’ purchase of preferred shares and warrants was as follows: Investor Preferred Shares Warrants Purchase Price Columbia Pacific Opportunity Fund, LP 200,000 100,000 $ 400,000 Prescott Group Aggressive Small Cap Master Fund 200,000 100,000 400,000 Mindus Holdings, Ltd. 100,000 50,000 200,000 500,000 250,000 $ 1,000,000 Concurrent with the closing of the purchase of the preferred shares and warrants, the Company issued 625,000 ordinary shares to Prescott Group Aggressive Small Cap Master Fund pursuant to the Amended and Restated Securities Purchase Agreement dated as of November 22, 2013 between the Company and Prescott Group Aggressive Small Cap Master Fund, as if such sale and issuance had occurred prior to November 22, 2015. This was approved by the Company’s shareholders on December 29, 2015. On December 29, 2015, the Company’s shareholders also approved the issuance of 45,082 warrants for our ordinary shares with an exercise price of $0.01 per share for an amendment to a promissory note. Fifty percent (50%) of these warrants vested on issuance while the remaining 50% vested on February 24, 2016. At the same shareholder meeting, the shareholders approved the issuance of 409,837 warrants for the Company’s ordinary shares with an exercise price of $0.01 per share for the issuance of guarantees of our term note with Comerica Bank. Fifty percent (50%) of these warrants vested on issuance while the remaining 50% vested on February 24, 2016. The fair value of these warrants was determined to be $982,625 as of December 31, 2015 and is considered an expense of the financing. On December 29, 2016, the Company entered into a Share Purchase Agreement with Prescott Group Aggressive Small Cap Master Fund (Prescott), providing for the issuance to Prescott in a private placement of 378,788 ordinary shares at a purchase price of $0.66 per ordinary share, for total proceeds to the Company of $250 thousand. The issuance and sale of the shares occurred on December 29, 2016. Also on December 29, 2016, in connection with the preferred share transaction in 2015, the Company issued 40,000 preferred shares to Columbia Pacific Opportunity Fund, Prescott Group Aggressive Small Cap Master Fund an Mindus Holdings in accordance with the rights, preferences and privileges of the preferred shares issued in the 2015 private placement. The preferred shares carry an 8% per annum cumulative dividend payable in kind by additional preferred shares, subject to adjustment for stock splits, combinations, recapitalizations and the like. As of December 31, 2016, the Company holds a total of 33,239 of its shares in treasury with a value of $1.8 million. All of the Company’s ordinary shares have equal voting rights. However, under applicable Israeli law, the shares held by the Company have no voting rights and, therefore, are excluded from the number of its outstanding shares. Since 2010, the Company uses these treasury shares from time to time for the issuance of shares pursuant to exercise of options and vested RSUs to meet the Company’s ordinary share requirements for its stock benefit plans. In March 2008, the board of directors approved two buy-back programs. Under the buy-back programs, the Company may purchase its shares from time to time, subject to market conditions and other relevant factors affecting the Company. In 2009, the Company repurchased 11,249 of its shares for an aggregate amount of $1.7 million under the buy-back programs. B. Share Options: 1. Employee Share Option Plans: Stock-based compensation plans comprise employee stock option plans and restricted stock units (“RSUs”) to employees, officers and directors. The purpose of the plans is to enable the Company to attract and retain qualified personnel and to motivate such persons by providing them with an equity participation in the Company. As of December 31, 2016, the Company has two share-based compensation plans: (a) the 1996 Share Option Plan, and (b) the 2007 Award Plan. Both plans are described below. The compensation costs that were charged to income for those plans amounted to $364 and $426 thousand for 2016 and 2015, respectively. In 1996, the Company adopted the 1996 Share Option Plan. Pursuant to the 1996 Share Option Plan, as amended, the Company reserved 1,050,000 ordinary shares for issuance to directors, officers, consultants and employees of the Company and its subsidiaries. The exercise price of the options granted under the 1996 Share Option Plan ranges from $1.8 to $20. As of December 31, 2016, 174,023 stock options remain available for future awards. Under the 1996 Share Option Plan, unless determined otherwise by the board, options vest over a three to four years’ period from the date of grant and expire 10 years after grant date. Unvested options are forfeited 30-90 days following termination of employment. Any options that are forfeited before expiration become available for future grants. The following table summarizes information about share options outstanding and exercisable as of December 31, 2016: Options Outstanding Options Exercisable Number Outstanding on December 31, 2016 Weighted Average Remaining Contractual Life Years Number Exercisable on December 31, 2016 Exercise Price $ 300,000 5.32 300,000 1.80 Data related to the 1996 Share Option Plan as of December 31, 2016 and 2015 and changes during the years ended on those dates are as follows: 2016 2015 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price $ $ Options outstanding at the beginning of year 300,000 1.80 393,850 2.89 Changes during the year: Forfeited - (93,850 ) 6.36 Options outstanding at end of year 300,000 300,000 Options exercisable at year-end 300,000 300,000 * The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model. There were no options granted or exercised in 2016 and 2015. The Company is required to assume a dividend yield as an input in the Black-Scholes model. The dividend yield assumption is based on the Company’s historical experience and expectation of future dividends payouts and may be subject to change in the future. The Company uses historical volatility in accordance with FASB ASC Topic 718, “Compensation - stock compensation”. The computation of volatility uses historical volatility derived from the Company’s exchange-traded shares. The risk-free interest assumption is the implied yield currently available on U.S. Treasury zero-coupon bonds, issued with a remaining term equal to the expected life term of the Company’s options. Pre-vesting rates forfeitures are approximately 15% and were estimated based on pre-vesting for feature experience. The Company uses the simplified method to compute the expected option term for options granted. 2. Restricted Share Units (RSU): In 2007, the Company adopted the 2007 Award Plan (RSU plan). In 2016 and 2015, under the RSU plan, as amended, the Company granted 198,000 and 263,000 RSUs, respectively. Under the RSU plan, unless determined otherwise by the board of directors, RSUs vest over a three years’ period from the date of the grant. There were no RSUs approved for immediate vesting on grant date in 2016 or 2015. Data related to the restricted stock units as of December 31, 2016 and 2015 and changes during the year were as follows: Year ended December 31, 2016 2015 (in thousands) RSUs outstanding at the beginning of the year 360,444 219,414 Changes during the year: Granted * 198,000 263,000 Vested (138,569 ) (107,370 ) Forfeited (167,097 ) (14,600 ) RSUs outstanding at the end of the year 252,778 360,444 Weighted average fair value at grant date $ 1.90 $ 1.74 * The fair value of RSUs is established based on the market value of the Company’s stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. C. Dividends: The Company has not paid any cash dividends on its ordinary shares in the past and does not expect to pay cash dividends on its ordinary shares in the foreseeable future. The Company paid share dividends on its preferred shares which carry an 8% per annum cumulative dividend payable in kind by additional preferred shares. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Income taxes | Note 11 - Income taxes: A. Basis of taxation: The Company and its subsidiaries are subject to tax in many jurisdictions and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. The Company believes that its accruals for tax liabilities are adequate for all open years. The Company considers various factors in making these assessments, including past history, recent interpretations of tax law, and the specifics of each matter. Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of residence. The Company elected to compute its taxable income in accordance with Income Tax Regulations (Rules for Accounting for Foreign Investors Companies and Certain Partnerships and Setting their Taxable Income), 1986. Accordingly, the Company’s taxable income or loss is calculated in U.S. dollars. Applying these regulations reduces the effect of foreign exchange rate (of NIS against the U.S. dollar) on the Company’s Israeli taxable income. Taxable income of Israeli companies is subject to tax at the rate of 25% and 26.5% in 2016 and 2015, respectively. In December 2016, the Israeli government published the Economic Efficiency Law (2016) (legislative amendments to accomplish budget goals for the years 2017 and 2018) According to which, in 2017 the tax rate will decrease by 1% and starting 2018 by 2%; so that the tax rate will be 24% in 2017 and 23% in 2018 and onwards. Accordingly, the tax rate will be 24% in 2017 and 23% in 2018 and onwards. The Company has received final tax assessments through 2011. B. Deferred tax assets and liabilities: Deferred tax reflects the net tax effects of temporary differences between the carrying amounts of assets or liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2016 and 2015, the Company’s deferred taxes were in respect of the following: December 31, 2016 2015 (in thousands) Net operating losses carry forwards $ 34,924 $ 32,303 Provisions for employee rights and other temporary differences 65 55 Deferred tax assets before valuation allowance 34,989 32,358 Valuation allowance (34,989 ) (32,358 ) Deferred tax assets (liability), net $ - $ - C. Loss before Income Taxes is composed as follows: Year ended December 31, 2016 2015 (in thousands) Domestic (Israel) $ (6,148 ) $ (2,724 ) Foreign (6,816 ) (3,377 ) Total loss before income taxes $ (12,964 ) $ (6,101 ) D. Provision for Taxes: Year ended 2016 2015 (in thousands) Current: Domestic (Israel) $ - $ - Foreign 13 18 13 18 Taxes related to prior years 9 23 Total provision for income taxes $ 22 $ 41 * In 2016 and 2015, mainly related to withholdings tax for prior years that cannot be realized due to liquidation of subsidiaries as non-future estimated taxable income. E. Uncertain Tax Position: The Company has recorded no liability for income taxes associated with unrecognized tax benefits at the date of adoption and have not recorded any liability associated with unrecognized tax benefits during 2016 and 2015. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit. F. A reconciliation between statutory tax to effective tax, assuming all income is taxed at the regular rates and the actual tax expense is as follows: December 31, 2016 2015 (in thousands) Loss before income taxes, per consolidated statements of income $ (12,964 ) $ (6,101 ) At the principal tax rate of the group (25% and 26.5% 2016 and 2015, respectively) 3,241 1,617 Decrease in taxes resulting from the following differences: Carry-forward losses for which the Company provided valuation allowance (2,622 ) 1,758 Effect of different tax rates in foreign subsidiaries (606 ) (3,357 ) Taxes related to previous years 9 23 Non-deductible expenses - - Income tax expense (benefit) in the consolidated statements of income for the reported year $ 22 $ 41 Effective Tax rate 0 % 0 % G. Tax Losses: The Company and its subsidiaries have NOL carry forwards for income tax purposes as of December 31, 2016 of approximately $120 million. Approximately $82 million were generated in Israel with no expiration date and the rest outside of Israel. |
Supplementary Financial Stateme
Supplementary Financial Statement Information | 12 Months Ended |
Dec. 31, 2016 | |
Supplementary Financial Statement Information [Abstract] | |
Supplementary Financial Statement Information | Note 12 - Supplementary Financial Statement Information: A. Balance Sheets: 1. Trade Accounts Receivables: December 31, 2016 2015 (in thousands) Trade accounts receivable $ 2,306 $ 2,020 Less allowance for doubtful accounts - - $ 2,306 $ 2,020 For the year ended December 31, 2016 and 2015, the Company deducted from the allowance (bad debts) $0 and $31 thousand. 2. Other Current Assets: December 31, 2016 2015 (in thousands) Prepaid expenses $ 148 $ 53 Short-term lease deposits - 11 Government departments and agencies 89 56 $ 237 $ 120 3. Other Current Liabilities: December 31, 2016 2015 (in thousands) Government departments and agencies $ 173 $ 13 Employees and wage-related liabilities 493 669 Accrued expenses and other current liabilities 249 277 $ 915 $ 959 4. The Company’s Long-lived Assets are as follows: December 31, 2016 2015 (in thousands) Israel $ 17 $ 32 U.S.A. 12 114 Europe and other 4 100 $ 33 $ 246 Long-lived assets information is based on the physical location of the assets at the end of each of the fiscal years. It is comprised from the Company’s property and equipment and technology intangible asset. The Company does not identify or allocate goodwill by geographic areas. B. Statements of Operations: 1. Geographic Areas Information: Sales: Classified by Geographic Areas: The Company adopted FASB ASC Topic 280, “segment reporting”. The Company operates in one operating segment (see Note 1 for a brief description of the Company’s business). The total revenue is attributable to geographic areas based on the location of end customers. The following present total revenue for the years ended December 31, 2016 and 2015 by geographic area: Year ended December 31, 2016 2015 (in thousands) North America 6,306 6,501 Europe 4,387 2,852 Israel 288 454 Total Revenue $ 10,981 $ 9,807 2. Principal Customers: There were two customers that represented 18.1% and 10.3% of the Company’s total revenue in 2016. There were three different customers that represented 21.6%, 13.7% and 12.4% of the Company’s total revenue in 2015. 3. Financial Expenses, Net: Year ended December 31, 2016 2015 (in thousands) Foreign currency translation adjustments (see Note 1A3) $ 165 $ (22 ) Interest expense 147 156 Grant of warrants to shareholders - 983 Financial Expenses, Net $ 312 $ 1,117 C. Loss Per Share: Basic and diluted loss per share (“EPS”) was computed based on the average number of shares outstanding during each year. No effect was given to potential instruments such as: share options unvested, RSUs, preferred shares and warrants since their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted net earnings per share attributable to ModSys International Ltd.: Year ended December 31, 2016 2015 (in thousands, except 1. Numerator: Amount for basic and diluted loss per share $ (12,180 ) $ (5,814 ) Dividend in kind (83 ) - (12,263 ) (5,814 ) 2. Denominator: Denominator for basic net loss per share - weighted average of shares 18,657,653 17,906,723 Effect of dilutive securities $ - $ - Denominator for diluted net earnings per share - weighted average shares and assuming dilution 18,657,653 17,906,723 Basic and diluted loss per share attributed ModSys International Ltd. $ (0.66 ) $ (0.32 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 – Subsequent Events: On January 6, 2017, the Company received a notice from NASDAQ stating that the Company has not held an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year end, December 31, 2015, and therefore, the Company does not comply with NASDAQ Listing Rule 5620(a) (the “Annual Meeting Rule”). The notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on NASDAQ. On February 15, 2017 the Company issued a preliminary proxy statement and set a shareholder meeting for March 29, 2017. This shareholder meeting will bring the Company in compliance with NASDAQ listing requirements. On February 14, 2017, the Company entered into two Share Purchase Agreements with Columbia Pacific Opportunity Fund, LP, providing for the issuance of ordinary shares in a private placement. The first Share Purchase Agreement is for the issuance of 757,575 ordinary shares of the Company, par value NIS 0.04 per share, at a price equal to $0.66 per share amounting to for aggregate purchase price of US $500,000. The closing of the First Agreement will take place on April 1, 2017, subject to approval of the Company’s shareholders and other customary closing conditions. In addition, the Company entered in to a second Share Purchase Agreement (“Second Agreement”) for the issuance of 757,575 ordinary shares of the Company, par value NIS 0.04 per share, at a price equal to $0.66 per share amounting for an aggregate purchase price of US $500 thousand. In the event that the volume weighted average price of the ordinary shares for the thirty days prior to July 1, 2017, as reported by Bloomberg Financial L.P. (“VWAP”) is lower than the $0.66, then the price per share shall be equal to the higher of (i) the VWAP and (ii) $0.50, and the number of shares shall be adjusted to equal the purchase price divided by the adjusted price per share. The closing of the Second Agreement will take place on July 1, 2017, subject to approval of the Company’s shareholders and other customary closing conditions. Also on February 15, 2017 the Company entered into the Seventh Amendment to the existing loan agreement with Comerica Bank to: (i) increase the amount of credit available on the non-formula line to $3.0 million; (ii) extend the maturity date of the non-formula revolving line and revolving line to February 15, 2019; (iii) amend the EBITDA covenant requirements; (iv) decrease the revolving line amount of credit available to $1.0 million from $1.5 million; and (iv) amend the definition of a new equity event. In connection with the increased line of credit from $2.0 million to $3.0 million described above as part of the Amendment, the Company agreed to issue warrants to purchase 378,788 ordinary shares to Prescott Group Aggressive Small Cap Master Fund in exchange for extending a guaranty for 2017. In addition, the Company agreed to issue warrants to purchase 735,294 ordinary shares to Columbia Pacific Opportunity Fund, LP and 441,176 ordinary shares to Prescott Group Aggressive Small Cap Master Fund in exchange for the guaranty of the Existing Agreement for 2016 and 2017. Each of the warrants has an exercise price of $0.01 per share and has a three-year term from the date of grant. The issuance of the warrants is contingent upon approval of the Company’s shareholders. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
General | A. General: The significant accounting policies, applied on a consistent basis, are as follows: 1. The Company: ModSys International Ltd. (together with its subsidiaries, the “Company” or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology modernization solutions. Modern Systems develops and markets enterprise legacy migration solutions and provides tools and professional services to international markets through several entities including wholly-owned or majority-owned subsidiaries located in: the United States, the United Kingdom, Italy, Romania and Israel. These technologies and services allow business to migrate from their legacy mainframe and distributed information technology infrastructures to modern environments and programming languages. The Company has incurred negative cash from operation and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flow position. Management believes that current cash position is sufficient to support the ongoing operations for the next twelve months from the date of this Annual Report. (See also Note 8A). 2. Accounting Principles: The consolidated financial statements are prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America. 3. Functional Currency: The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“dollar”). In addition, a substantial portion of the Company’s revenue and costs are incurred in dollars. Thus, the functional and reporting currency of the Company is considered to be the dollar. The functional currency of all subsidiaries is the US dollar therefore there is no unrealized gain/loss. Non-monetary transactions denominated in currencies other than the dollar are measured and recorded in dollar at the exchange rates prevailing at transaction date. Monetary assets and liabilities denominated in currencies other than the dollar are translated at the exchange rate on the balance sheet date. Transaction gain or losses on foreign currency translation are recorded in consolidated statement of operations. 4. Use of Estimates and Assumptions in the Preparation of the Financial Statements: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. |
Principles of Consolidation | B. Principles of Consolidation: The consolidated financial statements include the accounts of ModSys International Ltd. and its subsidiaries in which it has a controlling interest. Acquisition of subsidiaries is accounted for under the acquisition method. All intercompany balances and transactions have been eliminated upon consolidation. Non-controlling interests are included in equity. |
Cash and Cash Equivalents | C. Cash and Cash Equivalents: Cash equivalents are considered by the Company to be highly-liquid investments, including inter-alia, short-term deposits with banks, which do not exceed maturities of three months at the time of deposit and which are not restricted. |
Allowance for Doubtful Accounts | D. Allowance for Doubtful Accounts: The Company establishes an allowance for doubtful accounts to ensure trade and financing receivables are not overstated due to uncollectability. The allowance for doubtful accounts was based on specific receivables, which their collection, in the opinion of Company’s management, is in doubt. Trade receivables are charged off in the period in which they are deemed to be uncollectible. |
Property and Equipment, Net | E . Property and Equipment, Net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over their estimated useful lives. Annual rates of depreciation are as follows: % Computers and peripheral equipment 20-33 (mainly 33) Office furniture and equipment 6-15 (mainly 7) Leasehold improvements Over the shorter of lease term or the life of the assets Motor vehicles 15 |
Impairment of Long-Lived Assets | F. Impairment of Long-Lived Assets: The Company evaluates long-lived assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flow and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, it reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. For the year ending December 31, 2016, no impairment losses had been identified. |
Goodwill and purchased intangible assets | G. Goodwill and purchased intangible assets Goodwill and purchased intangible assets have been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but rather is subject to an annual impairment test. The Company is one operating segment and one reporting unit related to its overall information technology modernization. The goodwill impairment tests are conducted in two steps. In the first step, the Company determines the fair value of the reporting unit. If the net book value of the reporting unit exceeds its fair value, the Company would then perform the second step of the impairment test which requires allocation of the reporting unit’s fair value of all of its assets and liabilities in a manner similar to an acquisition cost allocation, with any residual fair value being allocated to goodwill. The implied fair value of the goodwill is then compared to the carrying value to determine impairment, if any. Generally, the company determines the fair value of the reporting unit using the market approach which is based on the market capitalization by using the share price of the Company in the NASDAQ stock market and an appropriate control premium. As of December 31, 2015, the market capitalization of the Company was significantly higher than the net book value of the reporting unit and therefore there was no need to calculate a control premium or to continue to step 2. As of December 31, 2016, after a 3-month period where the Company’s market capitalization was significantly lower than the net book value of the reporting unit the Company performed an analysis of an appropriate control premium which was found as immaterial. In establishing the appropriate market capitalization, the Company looked at the 10 days preceding the date that the annual impairment test is performed (the comparison period). There was a high volatility in the price and volumes of the Company’s share during the comparison period (between $0.63-$1.17). Around 40% of the trading volume in those 10 days was executed at a price per share within the range of $0.65-$0.69. During the comparison period and after the date that the annual impairment test was performed the Company engaged in a share purchase agreement at a price per share of $0.66 (see Note 10). In order to calculate its market capitalization, the Company used the price per share of $0.66. Since there was a high volatility in the Company’s price per share we corroborated the fair value by performing a discounted cash flows evaluation which resulted in an amount not materially different from the market capitalization. Following the results of the step one test, the Company continued to the second step which was performed by allocating the reporting unit’s fair value to all of its assets and liabilities, with any residual fair value being allocated to goodwill. The Company determined that the carrying value of goodwill should be impaired and therefore an impairment of $11.6 million was recorded. Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives of between 10 months to 9 years (for impairment of intangible assets see also Note 1F) On completion of the Company’s merger on December 1, 2014 with Sophisticated Business Systems, Inc., a Texas corporation doing business as “Ateras,” the fair value purchase price allocation from this acquisition resulted in the Company recording approximately $5.2 million in technology intangible assets. The Company subjected the value of these intangible assets to an annual impairment test as of December 31, 2016. In 2016, the impairment test indicated that the fair value of these intangible assets at this time was approximately $2.3 million, net of amortization, causing the Company to record an impairment of approximately $182 thousand. In 2015, the impairment was approximately $1.5 million. |
Research and Development Costs | H. Research and Development Costs: Research and development costs are charged to the statement of income as incurred. ASC No. 985, “Software”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on the Company’s product development process, technological feasibility is established when detailed program design is completed and verified. Costs incurred by the Company between completion of detailed program design and the point at which the products are ready for general release, have been insignificant. Therefore, all research and development costs have been expensed. |
Stock-based Compensation | I. Stock-based Compensation: In the past two years, all of the stock-based compensation awards were of restricted stock units (“RSUs”). RSUs are valued based on the market value of the underlying stock at the date of grant since the restriction is imposed during the vesting period. The Company also has a stock option plan. Stock option awards are measured and recognized as compensation expense based on estimated fair values on the date of grant using the Black-Scholes option-pricing model. This option pricing model requires that the Company makes several estimates, including the option’s expected life and the price volatility of the underlying stock. The Company recognizes the estimated fair value of option-based awards and RSUs, net of estimated forfeitures, as stock-based compensation costs using the accelerated vesting method. For the years ended December 31, 2016 and 2015 the Company recorded stock-based and RSUs compensation costs in the amount of $364 and $426 thousand, respectively. On December 31, 2016, the total unrecognized stock-based and RSUs compensation costs amounted to $396 thousand, and are expected to be recognized over the next 3 years. |
Revenue Recognition | J. Revenue Recognition: Revenue derived from direct software license agreements are recognized in accordance with FASB ASC Topic 985 “Software” (“ASC 9 85”), upon delivery of the software, when collection is probable, the license fee is otherwise fixed or determinable and persuasive evidence of an arrangement exists. The Company recognizes revenue from consulting fees based on the number of hours performed. Revenue from maintenance services are rec When a project involves significant production, modification, customization of software, or delivery of service, that are essential to the fundamentals of the software, revenue is recognized according to the percentage of completion method in accordance with the provisions of FASB ASC Topic 605-35. Under this method, estimated revenue is generally recognized based on costs incurred to date, as a percentage of total updated estimated costs. The Company recognizes contract losses, if any, in the period in which they first become evident. There are no rights of return, price protection or similar contingencies in the Company’s contracts. On December 31, 2016, approximately $1.5 million of the accounts receivable balance was unbilled due to the customer’s payment terms. On December 31, 2015, the amount of unbilled revenue was $1.1 million. The Company presents revenue from products and revenue from services in separate line items. The product revenue line item includes revenue generated from stand-alone software products. In the services revenue line item, the Company includes revenue generated from maintenance and consulting fees and revenue accounted for pursuant to ASC 605-20. Tax collected from customers and remitted to government authorities (including VAT) are presented in the income statement on a net basis. |
Advertising Costs | K. Advertising Costs: The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2016 and 2015 were $78 and $151 thousand, respectively. |
Income Taxes | L. Income Taxes: Deferred taxes are determined utilizing the “asset and liability” method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it’s more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the expected reversal dates of the specific temporary differences. The Company applied ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. |
Loss Per Share | M. Loss Per Share: Basic net loss per share is computed based on the weighted average number of ordinary shares outstanding during each year (including fully vested RSUs), net of treasury shares. Diluted earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year (see also Note 12C). Since the Company incurred net loss during the periods presented, no diluted EPS was presented as all the potential ordinary shares were anti-dilutive. |
Concentration of credit risks | N. Concentration of credit risks: Financial instruments that have the potential to expose the Company to credit risks are mainly cash and cash equivalents, bank deposit accounts, and trade receivables. The Company holds cash and cash equivalents, and deposit accounts at large banks in Israel, the United States, and Europe, thereby substantially reducing the risk of loss. The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts and generally does not require collateral. An appropriate allowance for doubtful accounts is included in the accounts. |
Fair value measurement | O. Fair value measurement: The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1 Level 2 Level 3 In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. |
Comprehensive loss | P. Comprehensive loss: Comprehensive loss includes only net income. |
Treasury Shares | Q. Treasury Shares: In the past, the Company repurchased its ordinary shares from time to time on the open market and they are currently held as treasury stock. The Company presents the cost to repurchase treasury stock as a reduction of shareholders’ equity. When treasury shares are used as consideration for share based payment the reduction is based on average purchase cost. |
Recently Issued Accounting Pronouncements | R. Recently Issued Accounting Pronouncements 1. Adopted in current period: In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial statements – Going concern (subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-14”). The new standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual periods thereafter. The new standard had no effect on the Company’s consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2016. The new standard had no effect on the Company’s consolidated financial statements. 2. Not yet adopted in current period: In May 2014, the FASB issued ASU No. 2014-09, Revenue from contracts with customers (Topic 606). Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on accounting for licenses of intellectual property, identifying performance obligations, principal versus agent considerations and other narrow technical corrections. The new revenue standard (and its related amendments) are effective for reporting periods (interim and annual) beginning after December 15, 2017, with early adoption permitted for reporting periods (interim and annual) beginning after December 15, 2016. The standard permits two methods of adoption: retrospectively to each reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company expects to adopt the standard in the first quarter of 2018 under the modified retrospective transition method. Based on the analysis conducted to date, the Company does not believe the adoption of the standard will have a material impact on its consolidated financial statements. However, the Company does have a few contracts that are comprised of a license agreement and related maintenance support, which are currently immaterial. Other similar contracts might be material in future periods, therefore, the Company is still assessing the potential impact of these contracts. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, which supersedes the lease accounting guidance in ASC 840, Leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2018 with early adoption permitted. The amendments must be adopted using a modified retrospective approach. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13. This update replaces the incurred loss impairment methodology in current U.S. GAAP for recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, the guidance requires to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2019. Early adoption is permitted as of reporting periods beginning after December 15, 2018, including in interim periods. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the amendments are effective. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-15. This update addresses whether to present certain specific cash flow items as operating, investing or financing activities. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017. Early adoption is permitted. The amendments will be applied retrospectively to each period presented. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In October 2016, the FASB issued Accounting Standards Update (ASU) 2016-16. This update removes the current exception in US GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017, with early adoption permitted. The amendments will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18. This updates provides guidance on the classification and presentation of changes in restricted cash or restricted cash equivalents in the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective for reporting periods (interim and annual) beginning after December 15, 2017 with early adoption permitted. The amendments will be applied retrospectively to each period presented. The Company is currently assessing the potential impact of this ASU on its consolidated financial statements |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of depreciation rates | % Computers and peripheral equipment 20-33 (mainly 33) Office furniture and equipment 6-15 (mainly 7) Leasehold improvements Over the shorter of lease term or the life of the assets Motor vehicles 15 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurement [Abstract] | |
Summary of fair value measurement | Fair value measurements using input type December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 410 - - $ 410 Restricted cash 254 - - 254 Intangible Assets - - 2,361 2,361 $ 664 $ - $ 2,361 $ 3,025 Fair value measurements using input type December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,479 - - $ 1,479 Restricted cash 4 - - 4 Intangible Assets 3,175 3,175 $ 1,483 $ - $ 3,175 $ 4,658 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment | December 31, 2016 2015 (in thousands) Cost: Computers and peripheral equipment $ 4,590 $ 8,726 Office furniture and equipment 411 537 Leasehold improvements 432 268 Motor vehicles 17 25 5,450 9,556 Accumulated Depreciation: Computers and peripheral equipment 4,562 8,576 Office furniture and equipment 406 441 Leasehold improvements 432 268 Motor vehicles 17 25 5,417 9,310 $ 33 $ 246 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill [Abstract] | |
Schedule of change in carrying amount of goodwill | December 31, 2016 2015 (in thousands) Balance as of January 1 Goodwill $ 67,618 $ 67,618 Accumulated impairment losses at the beginning of the period (41,815 ) (41,815 ) 25,803 25,803 Changes during the year Goodwill impairment* (11,646 ) - Balance as of December 31 Goodwill 67,618 67,618 Accumulated impairment losses at the end of the period (53,461 ) (41,815 ) $ 14,157 $ 25,803 *see also note 1G |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets, Net [Abstract] | |
Schedule of intangible assets and others, net | Useful life December 31, (years) 2016 2015 (in thousands) Original amount: Technology* 5 $ 51,494 $ 51,494 Customer related and backlog* 0.8 to 9 5,313 5,313 Others 14 14 56,821 56,821 Accumulated Depreciation: Technology** 49,147 48,333 Customer related and backlog 5,313 5,313 54,460 53,646 $ 2,361 $ 3,175 * The amounts of technology and backlog from the Ateras Merger are $5.2 million and $345 thousand, respectively. ** Includes impairment to amortization expense of $182 thousand for 2016 and $1.5 million for 2015. (See also Note 1G). |
Accrued Severance Pay, Net (Tab
Accrued Severance Pay, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Severance Pay, Net [Abstract] | |
Schedule of amounts accrued and amounts funded with managers' insurance policies | December 31, 2016 2015 (in thousands) Accrued severance pay $ 593 $ 555 Amount funded (355 ) (323 ) $ 238 $ 232 |
Loans from Banks and Others (Ta
Loans from Banks and Others (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Loans from Banks and Others [Abstract] | |
Schedule of long term loans from others | Average interest rate December 31, as of 2016 2015 December 31, 2016 Linkage Total long-term liabilities net of current portion % (in thousands) Loan from bank 4.25 $ $ 2,523 $ 2,702 Related party promissory note 2.00 $ $ 220 $ 220 Ministry of Production in Italy (Note 9 A3) 0.87 € 64 102 Current portion (785 ) (2,736 ) Long term portion $ 2,022 $ 288 |
Schedule of long-term loans from others due | December 31, 2016 2015 (in thousands) First year (current portion) $ 785 $ 2,736 Second year 32 254 Third year 1,990 34 Fourth year and thereafter - - Total $ 2,807 $ 3,024 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Schedule of minimum rental commitments under non-cancelable leases | Office Facilities Vehicles, Equipment, and Other (in thousands) Fiscal 2017 $ 231 $ 32 Fiscal 2018 189 32 Fiscal 2019 74 - Fiscal 2020 36 - Fiscal 2021 26 - $ 556 $ 64 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of investors' purchase of preferred shares and warrants | Investor Preferred Shares Warrants Purchase Price Columbia Pacific Opportunity Fund, LP 200,000 100,000 $ 400,000 Prescott Group Aggressive Small Cap Master Fund 200,000 100,000 400,000 Mindus Holdings, Ltd. 100,000 50,000 200,000 500,000 250,000 $ 1,000,000 |
Schedule of share options outstanding and exercisable | Options Outstanding Options Exercisable Number Outstanding on December 31, 2016 Weighted Average Remaining Contractual Life Years Number Exercisable on December 31, 2016 Exercise Price $ 300,000 5.32 300,000 1.80 |
Schedule of share option plan | 2016 2015 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price $ $ Options outstanding at the beginning of year 300,000 1.80 393,850 2.89 Changes during the year: Forfeited - (93,850 ) 6.36 Options outstanding at end of year 300,000 300,000 Options exercisable at year-end 300,000 300,000 * The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model. There were no options granted or exercised in 2016 and 2015. |
Schedule of restricted stock units and changes | Year ended December 31, 2016 2015 (in thousands) RSUs outstanding at the beginning of the year 360,444 219,414 Changes during the year: Granted * 198,000 263,000 Vested (138,569 ) (107,370 ) Forfeited (167,097 ) (14,600 ) RSUs outstanding at the end of the year 252,778 360,444 Weighted average fair value at grant date $ 1.90 $ 1.74 * The fair value of RSUs is established based on the market value of the Company’s stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Summary of deferred tax assets and liabilities | December 31, 2016 2015 (in thousands) Net operating losses carry forwards $ 34,924 $ 32,303 Provisions for employee rights and other temporary differences 65 55 Deferred tax assets before valuation allowance 34,989 32,358 Valuation allowance (34,989 ) (32,358 ) Deferred tax assets (liability), net $ - $ - |
Schedule of loss before income taxes | Year ended December 31, 2016 2015 (in thousands) Domestic (Israel) $ (6,148 ) $ (2,724 ) Foreign (6,816 ) (3,377 ) Total loss before income taxes $ (12,964 ) $ (6,101 ) |
Schedule of provision for taxes | Year ended 2016 2015 (in thousands) Current: Domestic (Israel) $ - $ - Foreign 13 18 13 18 Taxes related to prior years 9 23 Total provision for income taxes $ 22 $ 41 * In 2016 and 2015, mainly related to withholdings tax for prior years that cannot be realized due to liquidation of subsidiaries as non-future estimated taxable income. |
Schedule of reconciliation theoretical tax expense | December 31, 2016 2015 (in thousands) Loss before income taxes, per consolidated statements of income $ (12,964 ) $ (6,101 ) At the principal tax rate of the group (25% and 26.5% 2016 and 2015, respectively) 3,241 1,617 Decrease in taxes resulting from the following differences: Carry-forward losses for which the Company provided valuation allowance (2,622 ) 1,758 Effect of different tax rates in foreign subsidiaries (606 ) (3,357 ) Taxes related to previous years 9 23 Non-deductible expenses - - Income tax expense (benefit) in the consolidated statements of income for the reported year $ 22 $ 41 Effective Tax rate 0 % 0 % |
Supplementary Financial State32
Supplementary Financial Statement Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplementary Financial Statement Information [Abstract] | |
Schedule of trade accounts receivable | December 31, 2016 2015 (in thousands) Trade accounts receivable $ 2,306 $ 2,020 Less allowance for doubtful accounts - - $ 2,306 $ 2,020 |
Schedule of other current assets | December 31, 2016 2015 (in thousands) Prepaid expenses $ 148 $ 53 Short-term lease deposits - 11 Government departments and agencies 89 56 $ 237 $ 120 |
Schedule of other current liabilities | December 31, 2016 2015 (in thousands) Government departments and agencies $ 173 $ 13 Employees and wage-related liabilities 493 669 Accrued expenses and other current liabilities 249 277 $ 915 $ 959 |
Schedule of long-lived assets by geographic area | December 31, 2016 2015 (in thousands) Israel $ 17 $ 32 U.S.A. 12 114 Europe and other 4 100 $ 33 $ 246 |
Schedule of sales by geographic area | Year ended December 31, 2016 2015 (in thousands) North America 6,306 6,501 Europe 4,387 2,852 Israel 288 454 Total Revenue $ 10,981 $ 9,807 |
Schedule of financial income (expenses), net | Year ended December 31, 2016 2015 (in thousands) Foreign currency translation adjustments (see Note 1A3) $ 165 $ (22 ) Interest expense 147 156 Grant of warrants to shareholders - 983 Financial Expenses, Net $ 312 $ 1,117 |
Summary of computation of basic and diluted earnings per share | Year ended December 31, 2016 2015 (in thousands, except 1. Numerator: Amount for basic and diluted loss per share $ (12,180 ) $ (5,814 ) Dividend in kind (83 ) - (12,263 ) (5,814 ) 2. Denominator: Denominator for basic net loss per share - weighted average of shares 18,657,653 17,906,723 Effect of dilutive securities $ - $ - Denominator for diluted net earnings per share - weighted average shares and assuming dilution 18,657,653 17,906,723 Basic and diluted loss per share attributed ModSys International Ltd. $ (0.66 ) $ (0.32 ) |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Computers and peripheral equipment [Member] | Minimum [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 20.00% |
Computers and peripheral equipment [Member] | Maximum [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 33.00% |
Computers and peripheral equipment [Member] | Majority [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 33.00% |
Office furniture and equipment [Member] | Minimum [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 6.00% |
Office furniture and equipment [Member] | Maximum [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 15.00% |
Office furniture and equipment [Member] | Majority [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 7.00% |
Leasehold improvements [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation, Description | Over the shorter of lease term or the life of the assets |
Motor vehicles [Member] | |
Accounting Policies [Line Items] | |
Annual rates of depreciation | 15.00% |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | ||
Good will and intangible assets impairment | $ 11,600 | |
Net of amortization of impairment | 11,828 | $ 1,466 |
Unrecognized stock-based compensation costs | 396 | |
Unbilled accounts receivable | 1,500 | 1,100 |
Advertising costs | $ 78 | 151 |
Market capitalization, Description | Company's market capitalization was significantly lower than the net book value of the reporting unit we performed an analysis of an appropriate control premium which was found as immaterial. In establishing the appropriate market capitalization, we looked at the 10 days preceding the date that the annual impairment test is performed (the comparison period). There was a high volatility in the price and volumes of the Company's share during the comparison period (between $0.63-$1.17). Around 40% of the trading volume in those 10 days was executed at a price per share within the range of $0.65-$0.69. During the comparison period and after the date that the annual impairment test is performed the Company engaged in share purchase agreements at a price per share of $0.66 (see Note 10). In order to calculate the Company's market capitalization we used the price per share of $0.66. Since there was a high volatility in our price per share we corroborated the fair value by performing a discounted cash flows evaluation which resulted in an amount not materially different from the market capitalization. | |
RSU [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Unrecognized stock-based compensation costs | $ 364 | 426 |
Unrecognized compensation cost, recognition period | 3 years | |
Minimum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Intangible asset estimated useful life | 10 months | |
Maximum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Intangible asset estimated useful life | 9 years | |
Sophisticated Business Systems [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Fair values of assets acquired | $ 5,200 | |
Fair value of intangible assets | 2,300 | |
Net of amortization of impairment | $ 195 | $ 1,500 |
Business Combinations (Details)
Business Combinations (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Apr. 23, 2015 | |
Zulu Intercompany Merger [Member] | ||
Business Combinations Textual [Abstract] | ||
Intercompany merger, description | On April 23, 2015, the Company completed the intercompany merger (the "Zulu Intercompany Merger") of their majority-owned subsidiary (71.8% ownership), Zulu Software, Inc. with and into the Company's wholly-owned subsidiary, MS Modernization Services, Inc. as part of an internal organizational restructuring. The name of the surviving subsidiary is MS Modernization Services, Inc. As a result of the intercompany merger, ModSys International Ltd. owns 88.7% of the surviving subsidiary, MS Modernization Services, Inc. The transaction was accounted for as an equity transaction with non-controlling interests. | |
Zulu Intercompany Merger [Member] | Ms Modernization Services Inc. [Member] | ||
Business Combinations Textual [Abstract] | ||
Business acquisition majority owned subsidiary percentage | 88.70% | |
Ateras Merger [Member] | ||
Business Combinations Textual [Abstract] | ||
Unregistered ordinary shares issued | 6,195,494 | |
Unregistered ordinary shares issued, par value | $ 0.04 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 410 | $ 1,479 |
Restricted cash | 254 | 4 |
Intangible Assets | 2,361 | 3,175 |
Total fair value of assets | 3,025 | 4,658 |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 410 | 1,479 |
Restricted cash | 254 | 4 |
Intangible Assets | ||
Total fair value of assets | 664 | 1,483 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Intangible Assets | ||
Total fair value of assets | ||
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Intangible Assets | 2,361 | 3,175 |
Total fair value of assets | $ 2,361 | $ 3,175 |
Fair Value Measurement (Detai37
Fair Value Measurement (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurement (Textual) | ||
Impairment charges | $ 11,646 | |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||
Fair Value Measurement (Textual) | ||
Impairment charges | $ 11,600 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Cost | $ 5,450 | $ 9,556 |
Accumulated Depreciation | 5,417 | 9,310 |
Property and equipment, net | 33 | 246 |
Computers and peripheral equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 4,590 | 8,726 |
Accumulated Depreciation | 4,562 | 8,576 |
Office furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 411 | 537 |
Accumulated Depreciation | 406 | 441 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 432 | 268 |
Accumulated Depreciation | 432 | 268 |
Motor vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 17 | 25 |
Accumulated Depreciation | $ 17 | $ 25 |
Property and Equipment, Net (39
Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property and Equipment, Net (Textual) | ||
Depreciation expenses | $ 234 | $ 86 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of goodwill | ||
Goodwill gross - Beginning balance | $ 67,618 | $ 67,618 |
Accumulated impairment losses at the beginning of the period | (41,815) | (41,815) |
Goodwill - Beginning balance | 25,803 | 25,803 |
Changes during the year | ||
Goodwill impairment | (11,646) | |
Goodwill gross - Ending balance | 67,618 | 67,618 |
Accumulated impairment losses at the end of the period | (53,461) | (41,815) |
Goodwill - Ending balance | $ 14,157 | $ 25,803 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | $ 56,821 | $ 56,821 | |
Accumulated depreciation | 54,460 | 53,646 | |
Intangible assets, net | 2,361 | 3,175 | |
Customer related and backlog [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | [1] | 5,313 | 5,313 |
Accumulated depreciation | $ 5,313 | 5,313 | |
Customer related and backlog [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life (years) | [1] | 9 months 18 days | |
Customer related and backlog [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life (years) | [1] | 9 years | |
Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | [1] | $ 51,494 | 51,494 |
Accumulated depreciation | [2] | $ 49,147 | 48,333 |
Useful life (years) | [1] | 5 years | |
Others [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Original amount | $ 14 | $ 14 | |
[1] | The amounts of technology and backlog from the Ateras Merger are $5.2 million and $345 thousand, respectively. | ||
[2] | Includes impairment to amortization expense of $182 thousand for 2016 and $1.5 million for 2015. (See also Note 1G). |
Intangible Assets, Net (Detai42
Intangible Assets, Net (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets and Others, Net (Textual) | ||
Amortization expense | $ 182 | $ 1,500 |
Backlog [Member] | ||
Intangible Assets and Others, Net (Textual) | ||
Amortization expense | 345 | |
Technology [Member] | ||
Intangible Assets and Others, Net (Textual) | ||
Amortization expense | $ 5,200 |
Accrued Severance Pay, Net (Det
Accrued Severance Pay, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued Severance Pay, Net [Abstract] | ||
Accrued severance pay | $ 593 | $ 555 |
Amount funded | (355) | (323) |
Accrued severance pay, net | $ 238 | $ 232 |
Accrued Severance Pay, Net (D44
Accrued Severance Pay, Net (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Accrued Severance Pay, Net (Textual) | ||
Discretionary contribution | $ 0 | $ 51 |
Expenses related to severance pay | $ 91 | $ 85 |
Loans from Banks and Others (De
Loans from Banks and Others (Details) € in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2015USD ($) | Dec. 31, 2015EUR (€) | |
Debt Instrument [Line Items] | ||||
Current portion | € | € (785) | € (2,736) | ||
Long term portion | $ 2,022 | $ 288 | ||
Loan from bank [Member] | ||||
Debt Instrument [Line Items] | ||||
Current portion | $ 2,523 | 2,702 | ||
Average interest rate | 4.25% | |||
Related party promissory note [Member] | ||||
Debt Instrument [Line Items] | ||||
Current portion | $ 220 | $ 220 | ||
Average interest rate | 2.00% | |||
Ministry of Production in Italy [Member] | ||||
Debt Instrument [Line Items] | ||||
Current portion | € | € 64 | € 102 | ||
Average interest rate | 0.87% |
Loans from Banks and Others (46
Loans from Banks and Others (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Loans from Banks and Others [Abstract] | ||
First year (current portion) | $ 785 | $ 2,736 |
Second year | 32 | 254 |
Third year | 1,990 | 34 |
Fourth year and thereafter | ||
Total | $ 2,807 | $ 3,024 |
Loans from Banks and Others (47
Loans from Banks and Others (Details Textual) | Feb. 15, 2017USD ($) | Aug. 04, 2016USD ($) | Mar. 16, 2016USD ($) | May 31, 2015 | Sep. 30, 2014USD ($) | Dec. 31, 2016USD ($)shareholders |
Non-formula revolving line of credit facility [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | $ 2,000,000 | |||||
Number of shareholders | shareholders | 2 | |||||
Line of credit facility amount borrowed | $ 2,000,000 | |||||
Revolving line of credit facility [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | 533,000 | |||||
Revolving line of credit facility [Member] | Accounts receivable [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | $ 1,500,000 | |||||
Amendment [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Credit facility loan agreement, description | In September 2014, the Company entered into an amendment to the Company's existing loan agreement with Comerica Bank to: (i) increase the non-formula revolving line up to the amount of $2 million backed by guarantees; (ii) increase the borrowing base revolving line amount up to $1.5 million upon the closing of the Ateras merger; and (iii) extend the loan maturity date to December 31, 2015. The amendment has a financial covenant for a minimum liquidity ratio. The Company's obligations under the amendment are secured by a security interest in the Company's copyrights, trademarks, and patents. The remaining substantive provisions of the credit facility were not materially changed by this amendment. | |||||
Maturity date | Dec. 31, 2015 | |||||
Amendment [Member] | Non-formula revolving line of credit facility [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | $ 2,000,000 | |||||
Amendment [Member] | Revolving line of credit facility [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | $ 1,500,000 | |||||
Additional amendment [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Credit facility loan agreement, description | In May 2015, the Company entered into an additional amendment to the Company's existing loan agreement with Comerica Bank to among other things: (i) extend the maturity date of the non-formula revolving line and the revolving line to June 30, 2016; (ii) require us to raise new equity, on terms and from investors satisfactory to the lender, of not less than $2.5 million on or before December 31, 2015; and (iii) increase the number of trade accounts for which the concentration limit is not applicable. | |||||
Maturity date | Jun. 30, 2016 | |||||
Fifth Amendment [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Credit facility loan agreement, description | On March 16, 2016 , the Company entered into the Fifth Amendment to the existing loan agreement with Comerica Bank to: (i) waive the liquidity covenant violations of September and December 2015; (ii) extend the maturity date of the non-formula revolving line and the revolving line to June 30, 2017; (iii) amend the definition of eligible accounts receivable; (iv) waive the equity event of $2.5 million on or before December 31, 2015; (v) add a new six month rolling EBITDA covenant and (vi) limit the amount of cash transfer to the parent company. The remaining substantive provisions of the credit facility were not materially changed. | |||||
Maturity date | Jun. 30, 2017 | |||||
Equity event on existing loan agreement | $ 2,500,000 | |||||
Sixth Amendment [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Credit facility loan agreement, description | On August 4, 2016, the Company entered into the Sixth Amendment to the existing loan agreement with Comerica Bank to: (i) extend the maturity date of the non-formula revolving line and the revolving line to July 1, 2018; (ii) amend the EBITDA covenant requirements; and (iii) change the definition of liquidity to include a requirement to have a minimum balance of cash in Comerica Bank of $250 thousand at the end of each month. The remaining substantive provisions of the credit facility were not materially changed by this amendment. | |||||
Minimum balance of cash in Comerica Bank | $ 250,000 | |||||
Seventh Amendment [Member] | Subsequent Event [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Credit facility loan agreement, description | The Seventh Amendment to the existing loan agreement with to: (i) increase the amount of credit available on the non-formula line to $3.0 million; (ii) extend the maturity date of the non-formula revolving line and revolving line to February 15, 2019; (iii) amend the EBITDA covenant requirements; (iv) decrease the revolving line amount of credit available to $1.0 million from $1.5 million; and (iv) amend the definition of a new equity event. | |||||
Seventh Amendment [Member] | Non-formula revolving line of credit facility [Member] | Subsequent Event [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Increase borrowing capacity | $ 3,000,000 | |||||
Maturity date | Feb. 15, 2019 | |||||
Seventh Amendment [Member] | Revolving line of credit facility [Member] | Subsequent Event [Member] | ||||||
Loans From Banks and Others (Textual) | ||||||
Maturity date | Feb. 15, 2019 | |||||
Decrease revolving line amount, description | Decrease the revolving line amount of credit available to $1.0 million from $1.5 million |
Commitments and Contingencies48
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Office Facilities [Member] | |
Operating Leased Assets [Line Items] | |
Fiscal 2,017 | $ 231 |
Fiscal 2,018 | 189 |
Fiscal 2,019 | 74 |
Fiscal 2,020 | 36 |
Fiscal 2,021 | 26 |
Total payments due | 556 |
Vehicles, Equipment, and Other [Member] | |
Operating Leased Assets [Line Items] | |
Fiscal 2,017 | 32 |
Fiscal 2,018 | 32 |
Fiscal 2,019 | |
Fiscal 2,020 | |
Fiscal 2,021 | |
Total payments due | $ 64 |
Commitments and Contingencies49
Commitments and Contingencies (Details Textual) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2007USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Other Commitments [Line Items] | |||
Rent expense | $ 319 | $ 345 | |
Long-term debt | 2,807 | $ 3,024 | |
Ministry of Production in Italy [Member] | |||
Other Commitments [Line Items] | |||
Proceeds from issuance of debt and other | $ 585 | ||
Maturity date | Sep. 30, 2018 | ||
Debt instrument, minimum interest rate | 0.87 | ||
Long-term debt | $ 64 | ||
Percent of proceeds considered long-term debt | 63.50% | ||
Percent of proceeds considered a grant | 36.50% | ||
Israel's Office of the Chief Scientist [Member] | |||
Other Commitments [Line Items] | |||
Royal commitment, percent of funded product sales | 18.00% | ||
Royalty commitment, maximum percent of grant linked to product sales | 100.00% | ||
Contingent liability, maximum potential royalty payment | $ 177 |
Equity (Details)
Equity (Details) | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Preferred Shares | 500,000 |
Warrants | 250,000 |
Purchase Price | $ | $ 1,000,000 |
Columbia Pacific Opportunity Fund, LP [Member] | |
Investor | Columbia Pacific Opportunity Fund, LP |
Preferred Shares | 200,000 |
Warrants | 100,000 |
Purchase Price | $ | $ 400,000 |
Prescott Group Aggressive Small Cap Master Fund [Member] | |
Investor | Prescott Group Aggressive Small Cap Master Fund |
Preferred Shares | 200,000 |
Warrants | 100,000 |
Purchase Price | $ | $ 400,000 |
Mindus Holdings, Ltd. [Member] | |
Investor | Mindus Holdings, Ltd. |
Preferred Shares | 100,000 |
Warrants | 50,000 |
Purchase Price | $ | $ 200,000 |
Equity (Details 1)
Equity (Details 1) - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Options Outstanding | |
Number Outstanding on December 31, 2016 | 300,000 |
Weighted Average Remaining Contractual Life Years | 5 years 3 months 26 days |
Options Exercisable | |
Number Exercisable on December 31, 2016 | 300,000 |
Exercise Price | $ / shares | $ 1.80 |
Equity (Details 2)
Equity (Details 2) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Options | ||
Options outstanding at beginning of year | 300,000 | 393,850 |
Changes during the year: | ||
Forfeited | (93,850) | |
Options outstanding at end of year | 300,000 | 300,000 |
Options exercisable at year-end | 300,000 | 300,000 |
Weighted Average Exercise Price | ||
Weighted average exercise price, beginning of year | $ 1.80 | $ 2.89 |
Changes during the year: | ||
Forfeited | $ 6.36 |
Equity (Details 3)
Equity (Details 3) - Restricted Share Units (RSU) [Member] - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSUs outstanding at the beginning of the year | 360,444 | 219,414 | |
Changes during the year: | |||
Granted | [1] | 198,000 | 263,000 |
Vested | (138,569) | (107,370) | |
Forfeited | (167,097) | (14,600) | |
RSUs outstanding at the end of the year | 252,778 | 360,444 | |
Weighted average fair value at grant date | $ 1.90 | $ 1.74 | |
[1] | The fair value of RSUs is established based on the market value of the Company's stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Equity (Details Textual)
Equity (Details Textual) | Dec. 29, 2016USD ($)$ / sharesshares | Dec. 29, 2015$ / sharesshares | Nov. 25, 2015USD ($)$ / sharesshares | Nov. 22, 2013shares | Dec. 31, 2016USD ($)plansshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2009USD ($)shares | Dec. 31, 2016₪ / shares | Dec. 31, 2015₪ / shares |
Class of Stock [Line Items] | |||||||||
Ordinary shares, par value per share | ₪ / shares | ₪ 0.04 | ₪ 0.04 | |||||||
Treasury shares, shares | shares | 33,239 | 33,239 | |||||||
Treasury stock, total consideration | $ 1,821,000 | $ 1,821,000 | |||||||
Stock repurchase program, shares repurchased | shares | 11,249 | ||||||||
Stock repurchase program, value of shares repurchased | $ 1,700,000 | ||||||||
Compensation costs | $ 364,000 | $ 426,000 | |||||||
Ordinary shares issued during period | shares | 250 | ||||||||
Ordinary shares, par value per share | ₪ / shares | ₪ 0.04 | ₪ 0.04 | |||||||
Ordinary shares, shares issued | shares | 19,086,159 | 18,602,041 | |||||||
Preferred shares, shares issued | shares | 540,000 | 500,000 | |||||||
Fair value of preferred shares | $ 1,247,000 | $ 1,164,000 | |||||||
Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Compensation costs | 2,229,000 | ||||||||
1996 Share Option Plan [Member] | 2007 Award Plan [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Compensation costs | $ 364,000 | 426,000 | |||||||
Number of plan | plans | 2 | ||||||||
Prescott Group Aggressive Small Cap Master Fund [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Ordinary shares, shares outstanding | shares | 378,788 | ||||||||
Ordinary shares issued during period | shares | 625,000 | ||||||||
Ordinary shares, par value per share | $ / shares | $ 0.66 | ||||||||
Gross proceed received aggregate | $ 250,000 | ||||||||
Columbia [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Interest rate | 8.00% | ||||||||
Preferred shares, shares issued | shares | 40,000 | ||||||||
Preferred stock dividend rate | 8.00% | ||||||||
Shareholder [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Exercise price of warrants | $ / shares | $ 0.01 | ||||||||
Issuance expenses | 982,625 | ||||||||
Warrants to purchase ordinary shares | shares | 45,082 | ||||||||
Exercise of warrants description | Fifty percent (50%) of these warrants vested on issuance while the remaining 50% vested on February 24, 2016. At the same shareholder meeting, the shareholders approved the issuance of 409,837 warrants for the Company's ordinary shares with an exercise price of $0.01 per share for the issuance of guarantees of our term note with Comerica Bank. Fifty percent (50%) of these warrants vested on issuance while the remaining 50% vested on February 24, 2016. | ||||||||
Securities Purchase Agreement [Member] | Investor [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Exercise price of warrants | $ / shares | $ 0.01 | ||||||||
Warrants, contractual term | 2 years | ||||||||
Fair value of warrants | 540,528 | ||||||||
Debt conversion, shares issued, value | $ 332,000 | ||||||||
Preferred shares, shares issued | shares | 500,000 | ||||||||
Warrants to purchase ordinary shares | shares | 250,000 | ||||||||
Preferred stock dividend rate | 8.00% | ||||||||
Preferred stock, conversion basis | The preferred shares are convertible into the Company's ordinary shares on a one-to-one basis at the option of the holder. Should the volume weighted average price of the ordinary shares be $5.00 or more for ten consecutive trading days at any time two years from the date of issuance, the preferred shares will be automatically converted into ordinary shares at the adjusted $2.00 share price. | ||||||||
Preferred stock, liquidation preference per share | $ / shares | $ 3 | ||||||||
Purchase price of preferred shares and warrants | $ 1,000 | ||||||||
Fair value of preferred shares | $ 2,688,375 |
Equity (Details Textual 1)
Equity (Details Textual 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation ("SBC") | $ 364 | $ 426 | |
Preferred stock, dividend payment terms | The Company paid share dividends on its preferred shares which carry an 8% per annum cumulative dividend payable in kind by additional preferred shares, calculated based on amount of $2.00 per share. | ||
1996 Share Option Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options remain available for future awards | 174,023 | ||
Ordinary shares reserved for future issuance | 1,050,000 | ||
Shares outstanding, remaining contractual life | 10 years | ||
Minimum [Member] | 1996 Share Option Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price for options under plan | $ 1.8 | ||
Vesting period of shares under plan | 3 years | ||
Unvested options, term for forfeiture, post employment | 30 days | ||
Maximum [Member] | 1996 Share Option Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price for options under plan | $ 20 | ||
Vesting period of shares under plan | 4 years | ||
Unvested options, term for forfeiture, post employment | 90 days | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Pre-vesting forfeiture rate | 15.00% | ||
Restricted Share Units (RSU) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period of shares under plan | 3 years | ||
Shares granted | [1] | 198,000,000 | 263,000,000 |
[1] | The fair value of RSUs is established based on the market value of the Company's stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes [Abstract] | ||
Net operating losses carry forwards | $ 34,924 | $ 32,303 |
Provisions for employee rights and other temporary differences | 65 | 55 |
Deferred tax assets before valuation allowance | 34,989 | 32,358 |
Valuation allowance | (34,989) | (32,358) |
Deferred tax assets (liability), net |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Abstract] | ||
Domestic (Israel) | $ (6,148) | $ (2,724) |
Foreign | (6,816) | (3,377) |
Loss before taxes on income | $ (12,964) | $ (6,101) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Domestic (Israel) | ||
Foreign | 13 | 18 |
Current tax provision (benefit) | 13 | 18 |
Taxes related to prior years Deferred: | 9 | 23 |
Total provision for income taxes | $ 22 | $ 41 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Abstract] | ||
Loss before income taxes, per consolidated statements of income | $ (12,964) | $ (6,101) |
At the principal tax rate of the group (25% and 26.5% 2016 and 2015, respectively) | 3,241 | 1,617 |
Decrease in taxes resulting from the following differences: | ||
Carry-forward losses for which the Company provided valuation allowance | (2,622) | 1,758 |
Effect of different tax rates in foreign subsidiaries | (606) | (3,357) |
Taxes related to previous years | 9 | 23 |
Non-deductible expenses | ||
Income tax expense (benefit) in the consolidated statements of income for the reported year | $ 22 | $ 41 |
Effective Tax rate | 0.00% | 0.00% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes (Textual) | ||
Corporate income tax rate | 25.00% | 26.50% |
Net operating loss carry forwards | $ 120 | |
Tax rate adjustment description | The Israeli government published the Economic Efficiency Law (2016) (legislative amendments to accomplish budget goals for the years 2017 and 2018) According to which, in 2017 the tax rate will decrease by 1% and starting 2018 by 2%; so that the tax rate will be 24% in 2017 and 23% in 2018 and onwards. Accordingly, the tax rate will be 24% in 2017 and 23% in 2018 and onwards. | |
Israel [Member] | ||
Income Taxes (Textual) | ||
Corporate income tax rate | 25.00% | 26.50% |
Net operating loss carry forwards | $ 82 |
Supplementary Financial State61
Supplementary Financial Statement Information (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Supplementary Financial Statement Information [Abstract] | ||
Trade accounts receivable | $ 2,306 | $ 2,020 |
Less allowance for doubtful accounts | ||
Trade accounts receivable, Net | $ 2,306 | $ 2,020 |
Supplementary Financial State62
Supplementary Financial Statement Information (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Supplementary Financial Statement Information [Abstract] | ||
Prepaid expenses | $ 148 | $ 53 |
Short-term lease deposits | 11 | |
Government departments and agencies | 89 | 56 |
Other current assets, Total | $ 237 | $ 120 |
Supplementary Financial State63
Supplementary Financial Statement Information (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Supplementary Financial Statement Information [Abstract] | ||
Government departments and agencies | $ 173 | $ 13 |
Employees and wage-related liabilities | 493 | 669 |
Accrued expenses and other current liabilities | 249 | 277 |
Other current liabilities, Total | $ 915 | $ 959 |
Supplementary Financial State64
Supplementary Financial Statement Information (Details 3) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | $ 33 | $ 246 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | 17 | 32 |
U.S.A. [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | 12 | 114 |
Europe and other [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | $ 4 | $ 100 |
Supplementary Financial State65
Supplementary Financial Statement Information (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total Revenue | $ 10,981 | $ 9,807 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total Revenue | 6,306 | 6,501 |
Europe [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total Revenue | 4,387 | 2,852 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total Revenue | $ 288 | $ 454 |
Supplementary Financial State66
Supplementary Financial Statement Information (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Supplementary Financial Statement Information [Abstract] | ||
Foreign currency translation adjustments (see Note 1A3) | $ 165 | $ (22) |
Interest expense | 147 | 156 |
Grant of warrants to shareholders | 983 | |
Financial Expenses, Net | $ 312 | $ 1,117 |
Supplementary Financial State67
Supplementary Financial Statement Information (Details 6) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | ||
Amount for basic and diluted loss per share | $ (12,180) | $ (5,814) |
Dividend in kind | (83) | |
Net income loss, basic | $ (12,263) | $ (5,814) |
Denominator: | ||
Denominator for basic net loss per share - weighted average of shares | 18,657,653 | 17,906,723 |
Effect of dilutive securities | ||
Denominator for diluted net earnings per share - weighted average shares and assuming dilution | 18,657,653 | 17,906,723 |
Basic and diluted loss per share attributed ModSys International Ltd. | $ (0.66) | $ (0.32) |
Supplementary Financial State68
Supplementary Financial Statement Information (Details Textual) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($)Number | |
Supplementary Financial Statement Information (Textual) | ||
Allowance deducted from bad debts | $ | $ 0 | $ 31 |
Sales Revenue, Net [Member] | Customer One [Member] | ||
Supplementary Financial Statement Information (Textual) | ||
Concentration risk, percentage | 18.10% | 21.60% |
Number of customers | 2 | 3 |
Sales Revenue, Net [Member] | Customer Two [Member] | ||
Supplementary Financial Statement Information (Textual) | ||
Concentration risk, percentage | 10.30% | 13.70% |
Number of customers | 2 | 3 |
Sales Revenue, Net [Member] | Customer Three [Member] | ||
Supplementary Financial Statement Information (Textual) | ||
Concentration risk, percentage | 12.40% | |
Number of customers | 3 |
Subsequent Events (Details)
Subsequent Events (Details) | Feb. 15, 2017USD ($)shares | Feb. 14, 2017USD ($)$ / sharesshares | Jan. 03, 2017USD ($)shares | Dec. 29, 2016USD ($)$ / shares | Nov. 22, 2013shares | Dec. 31, 2016USD ($)shares | Feb. 14, 2017₪ / shares | Dec. 31, 2016₪ / shares | Dec. 31, 2015₪ / sharesshares |
Subsequent Event [Line Items] | |||||||||
Ordinary shares, shares issued | shares | 19,086,159 | 18,602,041 | |||||||
Ordinary shares, par value per share | ₪ / shares | ₪ 0.04 | ₪ 0.04 | |||||||
Ordinary shares issued during perid | shares | 250 | ||||||||
Non-formula revolving line of credit facility [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Increase borrowing capacity | $ | $ 2,000,000 | ||||||||
Prescott Group Aggressive Small Cap Master Fund [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Ordinary shares, par value per share | $ / shares | $ 0.66 | ||||||||
Ordinary shares issued during perid | shares | 625,000 | ||||||||
Issuance of ordinary shares | $ | $ 250,000 | ||||||||
Subsequent Event [Member] | Seventh Amendment [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Credit facility loan agreement, description | The Seventh Amendment to the existing loan agreement with to: (i) increase the amount of credit available on the non-formula line to $3.0 million; (ii) extend the maturity date of the non-formula revolving line and revolving line to February 15, 2019; (iii) amend the EBITDA covenant requirements; (iv) decrease the revolving line amount of credit available to $1.0 million from $1.5 million; and (iv) amend the definition of a new equity event. | ||||||||
Subsequent Event [Member] | Seventh Amendment [Member] | Non-formula revolving line of credit facility [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Increase borrowing capacity | $ | $ 3,000,000 | ||||||||
Subsequent Event [Member] | Mr. Edenfield [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Compensation | $ | $ 300,000 | ||||||||
Ordinary shares, shares issued | shares | 1,750,000 | ||||||||
Subsequent Event [Member] | Columbia Pacific Opportunity Fund Lp [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Warrants to purchase common shares | shares | 735,294 | ||||||||
Warrants exercised | $ | $ 10 | ||||||||
Warrant expire term | Three-year term from the date of grant. | ||||||||
Subsequent Event [Member] | Columbia Pacific Opportunity Fund Lp [Member] | Share purchase agreements one [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Ordinary shares, par value per share | (per share) | $ 0.66 | ₪ 0.04 | |||||||
Ordinary shares issued during perid | shares | 757,575 | ||||||||
Issuance of ordinary shares | $ | $ 500,000 | ||||||||
Subsequent Event [Member] | Columbia Pacific Opportunity Fund Lp [Member] | Share purchase agreements two [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Ordinary shares, par value per share | (per share) | $ 0.66 | ₪ 0.04 | |||||||
Ordinary shares issued during perid | shares | 757,575 | ||||||||
Issuance of ordinary shares | $ | $ 500,000 | ||||||||
Share issued, description | In the event that the volume weighted average price of the ordinary shares for the thirty days prior to July 1, 2017, as reported by Bloomberg Financial L.P. ("VWAP") is lower than $0.66, then the price per share shall be equal to the higher of (i) the VWAP and (ii) $0.50, and the number of shares shall be adjusted to equal the purchase price divided by the adjusted price per share. The closing of the Second Agreement will take place on July 1, 2017, subject to approval of the Company's shareholders and other customary closing conditions. | ||||||||
Subsequent Event [Member] | Prescott Group Aggressive Small Cap Master Fund [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Ordinary shares, shares issued | shares | 441,176 | ||||||||
Credit facility loan agreement, description | In connection with the increased line of credit from $2.0 million to $3.0 million described above as part of the Amendment | ||||||||
Increase borrowing capacity | $ | $ 3,000,000 | ||||||||
Warrants to purchase common shares | shares | 378,788 | ||||||||
Warrants exercised | $ | $ 10 |